Thursday, September 13, 2012

Samsung, Sony renew rivalry in medical devices

After trading blows
over the last two decades for supremacy in the consumer electronics market,
Samsung Electronics and Sony are set to continue their rivalry in the new arena
of medical devices.

Only a decade ago, the Japanese company led almost every
sector in the information technology industry while its Korean competitor
trailed behind trying to catch up. Now, Samsung finds itself ahead in major
markets such as smartphones and other consumer electronic goods. It remains to be seen whether Sony can strike back in the
medical equipment market, where it’s experience and sophistication in optical
technology and systems could provide an advantage. Both firms are planning
aggressive investment in the business during the second half of the year.

Following a change of leadership from Howard Stringer to
Kazuo Hirai in April, Sony has been vocal about its intentions to find new
growth engines, one of them being the medical business. New CEO Hirai said
during his inauguration press conference on April 11 that the company plans to
make the medical sector a “business worth 100 billion yen ($1.25 billion) in
the mid- and long-term.”According to statements released on the same day, Sony has
set a sales target of 50 billion yen ($629 million) for its 2014 fiscal-year.
It is planning to purchase 58.18 percent share of subsidiary Sony
Entertainment, which in turn holds 55.19 percent of M3, a medical service
provider. The main motivation behind the purchase is to take managerial control
of M3.

Out of some 280,000 doctors based in Japan, around 200,000
are reportedly subscribed to an Internet information service offered by M3.

The Japanese firm is also planning to buy shares of
Shinjuku-based lens maker Olympus, which saw its stock price plummet after
admitting guilt to the biggest accounting fraud in the country’s history.
Olympus makes the best endoscopes in the world, a must-have business for Sony
in order to successfully venture into the medical arena.The electronics maker has seen a fourth consecutive
fiscal-year loss, which it attributed to last year’s floods in Thailand that
hampered its supply chain there, the global recession and a strong yen. It
posted a record loss of $5.7 billion for the financial year that ended in
March.

It has been trying to find leeway outside its electronics
division, its established mainstay business, especially from Sony Pictures.
Though Hirai vowed to regenerate the company’s television business to its
“former glory,” the sector is currently dominated by the world’s biggest
television manufacturer Samsung.

The Korean firm toppled Sony in 2006 and has been the top
television maker for 26 straight quarters, according to research agency
DisplaySearch. The agency said it had a global market share of 28.5 percent in
terms of revenue. Samsung posted a record quarterly profit for the second
quarter of $5.9 billion thanks to skyrocketing smartphone sales. But the company is leaving no stone unturned and has chosen
medical equipment and biologics among five new key growth engines (the others
being solar energy, car batteries and light emitting diode display panels) that
together could bring in 50 trillion won ($44.1 billion) in revenue by 2020. The group acquired medical equipment maker Medison and
renamed it Samsung Medison, and recently absorbed eight of its subsidiaries
based overseas into the one here. The outfit is speculated to be looking into
merging companies making equipment for magnetic resonance imaging and computed
tomography.

“Samsung is considering various ways to expand into the
medical business as we have chosen it as one of our new growth engines,” said a
Samsung spokesman. He declined to comment on specifics of which companies in
what country the group is looking into buying. The spokesman said that Samsung will manufacturer X-ray
computed tomography equipment while Samsung Medison will make magnetic
resonance imaging machines.